It has been about a month since the last earnings report for American Water Works (AWK - Free Report) . Shares have added about 4.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
American Water Works Q1 Earnings In Line, Sales Lag
Water utility company, American Water Works Company’s first-quarter 2017 earnings per share of 52 cents were on par with the Zacks Consensus Estimate. Earnings were up 13.0% from the year-ago quarter.
The increase in earnings can be attributed to higher earnings at the Regulated businesses and Market-based business segments.
Total Revenue
First-quarter total revenue of $756 million lagged the Zacks Consensus Estimate of $765 million by 1.2%. However, reported revenues were up 1.8% year over year.
Highlights of the Release
Total operating expenses in the reported quarter were $529 million, in line with the year-ago quarter.
Operating income in the reported quarter were $227 million, up 6.1% year over year.
In the first quarter, capital expenditures were $242 million to upgrade and maintain the existing infrastructure of the company.
Segment Details
Regulated businesses’
net income was $94.1 million, up 8.1% from $87.1 million reported in year-ago period. The year-over-year increase was due to additional authorized revenues and surcharges to support its infrastructure investments, acquisitions and organic growth.
Market-based businesses’
net income was $6.6 million compared with $6.1 million a year ago. The improvement in income was due to better contribution from The Homeowner Services Group and Keystone, partially offset by lower capital upgrades in the Military Services Group.
Financial Highlights
Cash and cash equivalents were $78 million as of Mar 31, 2017, up from $75 million as of Dec 31, 2016.
Long-term debt was $5,753 million as of Mar 31, 2017, lower than $5,759 million as of Dec 31, 2016.
Guidance
American Water Works reaffirmed its 2017 earnings guidance from continuing operations to the range of $2.98–$3.08 per diluted share.
Ageing infrastructure is a pressing problem for most water utilities. For 2017, American Water Works’ capital investment budget is $1.5 billion. The five-year plan of the company is to invest $5.9 billion in infrastructure improvement.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate have trended downward during the past month. There has been one revision higher for the current quarter compared to three lower.
American Water Works Price and Consensus
VGM Scores
At this time, the stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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It has been about a month since the last earnings report for American Water Works (AWK - Free Report) . Shares have added about 4.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
American Water Works Q1 Earnings In Line, Sales Lag
Water utility company, American Water Works Company’s first-quarter 2017 earnings per share of 52 cents were on par with the Zacks Consensus Estimate. Earnings were up 13.0% from the year-ago quarter.
The increase in earnings can be attributed to higher earnings at the Regulated businesses and Market-based business segments.
Total Revenue
First-quarter total revenue of $756 million lagged the Zacks Consensus Estimate of $765 million by 1.2%. However, reported revenues were up 1.8% year over year.
Highlights of the Release
Total operating expenses in the reported quarter were $529 million, in line with the year-ago quarter.
Operating income in the reported quarter were $227 million, up 6.1% year over year.
In the first quarter, capital expenditures were $242 million to upgrade and maintain the existing infrastructure of the company.
Segment Details
Regulated businesses’
net income was $94.1 million, up 8.1% from $87.1 million reported in year-ago period. The year-over-year increase was due to additional authorized revenues and surcharges to support its infrastructure investments, acquisitions and organic growth.Market-based businesses’
net income was $6.6 million compared with $6.1 million a year ago. The improvement in income was due to better contribution from The Homeowner Services Group and Keystone, partially offset by lower capital upgrades in the Military Services Group.Financial Highlights
Cash and cash equivalents were $78 million as of Mar 31, 2017, up from $75 million as of Dec 31, 2016.
Long-term debt was $5,753 million as of Mar 31, 2017, lower than $5,759 million as of Dec 31, 2016.
Guidance
American Water Works reaffirmed its 2017 earnings guidance from continuing operations to the range of $2.98–$3.08 per diluted share.
Ageing infrastructure is a pressing problem for most water utilities. For 2017, American Water Works’ capital investment budget is $1.5 billion. The five-year plan of the company is to invest $5.9 billion in infrastructure improvement.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate have trended downward during the past month. There has been one revision higher for the current quarter compared to three lower.
American Water Works Price and Consensus
VGM Scores
At this time, the stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. Charting a somewhat similar path, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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